Xbox 30% Margin Target Spurs Layoffs, Price Hikes

Multiple reports say Microsoft set an across-the-board 30% “accountability margins” target for its Xbox division in fall 2023, well above the video game industry average (roughly 17–22%) and Xbox’s recent margins (about 10–20%, with some single-digit figures). The target, which coincided with large acquisitions (ZeniMax, Activision) and significant AI infrastructure spending, has been cited by insiders and analysts as a driver of widespread layoffs, studio reorganizations, canceled projects and policy reversals at Xbox. To try to meet the margin goal, Xbox raised console MSRPs (the top-tier model reached about $800), increased premium Game Pass prices by roughly 40–50%, and released some first-party titles on rival platforms. Microsoft says it evaluates projects differently and makes difficult decisions to focus resources on priorities, while critics argue the across-the-board margin demand clashes with gaming economics and has strained the division.